Have your say: Charging orders

Charging orders secure debt against your home

Major high street banks are among those converting "unsecured" loans into "secured" loans by use of a legal procedure called a "charging order".

When this happens the money can be reclaimed from the proceeds when the borrower's house is sold.

Leading debt counsellors are unhappy that this is becoming more common as they say it undermines the work they are doing with people in debt.

What do you think about lenders turning unsecured borrowing into a debt secured against people's homes?

Do you think the way unsecured loans are marketed should be changed?

Have you had a charging order placed on your property? Are you worried about what will happen if you sell it?

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What exactly is wrong with lenders, whoever they are, big banks or individuals, trying to recover money from people who have borrowed it, spent it and enjoyed the benefit of it and then who do not pay it back as they had agreed to, or indeed at all?

Charging orders are nothing new and are a pretty obvious way to secure a debt John Edwards, Skipton

I cannot see why this is any sort of an issue. Charging orders are nothing new and are a pretty obvious way to secure a debt owed by someone with the assets (a house) to repay it, but who declines to do so.

Nobody forced them to borrow the money in the first place.
John Edwards, Skipton

I am in agreement with the banks charging against the property of a persistent debtor, but I am familiar with a case that in my opinion warrants far more public awareness.

A debtor owing large sums of money to the Legal Aid Board can manipulate his state of affairs to the extent of having the debt transferred to his divorced wife's home which was legally transferred to her by a High Court judge in order that she and her children had a roof over their heads.

The home is now blighted by many thousands of pounds, so she will be forced to repay her ex-husband's debts and have little left over if she moves house.

Perhaps you could spare a slot in the programme to warn people.
CF Wheeler, Maidstone

There can surely be no complaint about a finance house taking out a charging order.

They will only do so (at a cost to themselves) if the debtor has reneged on the arrangement.

The CAB really is wasting its time - and money - if it thinks it can possibly claim such action is unfair.

Charging orders are the last resort and do not offer a quick recovery of the money. Viv Seymour

This said, there is undoubtedly good reason to criticise some lenders given their headlong fight to lend, come what may.

However, nobody is lent money unless they have asked to borrow.

If the finance house refused on the basis that it thought the proposing debtor was "already over-committed" then the CAB would no doubt scream unfair practice.

Charging orders are the last resort and do not offer a quick recovery of the money.

The real answer is "Do not borrow unless you can afford it..." and if you do get into trouble talk to the lender as soon as possible and do not try to pass the buck elsewhere.
Viv Seymour

Many people here seem to think that no-one is under any obligation to pay back unsecured debt!

Yes, there is a higher rate of interest, reflecting the fact that there will be costs for the lender to bear if the borrower chooses not to repay.

Surely it can never be fair to expect a debt to be written off whilst the defaulter still has assets Dave Harvey, Swansea

And there is always the risk that the borrower may go bankrupt. But surely it can never be fair to expect a debt to be written off whilst the defaulter still has assets?

If this were to be permitted, then I'd borrow a million tomorrow and choose never to repay it!
Dave Harvey, Swansea

I understand that banks want to recover bad debt and I am glad that they do as otherwise it increases the cost of borrowing for those that do pay off their debts.

I think that it's perfectly reasonable for debts to be paid on the sale of a property, provided no-one is forced to sell their home to pay the debt.

It costs money to sell and to move house, and if you can afford to move you should have to pay outstanding defaulted debts.

If it is easy to walk away from debts why would anyone bother to pay? Andrew Jones, Midgley

We all have to take responsibility for our actions.

I know things can go wrong for anyone and debts are often multiple and complex and result in the loss of a home, the cost of which we all have to pick up in terms of re-housing, health care and benefits.

We do not live in a perfect world but if it is easy to walk away from debts why would anyone bother to pay?
Andrew Jones, Midgley

What is needed is for the government to step in to stop banks from lending without making sure the borrower can afford the payments.
Geoff, Newcastle

This is like shutting the stable door after the horse has gone.

If loan and credit card companies had given more thought to who they were lending money to, then this could have been avoided.

The finance houses have overstretched their calculations and we all have to suffer Anne Scott, Wadebridge

I could have foreseen this happening at least 20 years ago.

It would appear that the finance houses have overstretched their calculations and we all have to suffer. Surely they are educated and trained experts in this field?
Anne Scott, Wadebridge

The high risk of default is reflected in the rate of interest.

It should not be possible to re-classify a loan as chargeable, which is what a charging order does, if an exorbitant level of interest has been imposed.
James Weekes, Kingston Upon Thames

There should be a change in the law to prevent the banks securing the loan on the home.

The bank had the option initially to offer an unsecured or a secured loan.

They lent the money knowing the risk. The borrower paid the price in higher interest rates to make sure the loan never threatened their home.

How can the bank then have it both ways?
Keith Wild, Huddersfield

Having formerly worked in the debt recovery department of a major bank, and on occasions referred debtors accounts for a charging order, I can honestly say it was only as a last resort.

Those whose accounts were passed across for this form of secured recovery were the people whose accounts had already been through the courts.

They often failed to pay the small sums of money accepted by the court as repayments (often £1 or £2 per month), but they did have an asset, their home.

The borrower broke the terms for whatever reason without the permission of the bank Simon, Hove

Why shouldn't the banks and other responsible lenders be able, through the courts, to change the terms of the loan made after it has been defaulted on.

After all the borrower broke the terms for whatever reason without the permission of the bank.

Nor has the borrower had to go to court, obtain judgment, issue warrants for seizure of goods and so on before even considering the cost implications of a charging order.

Oh, and not getting your money back for potentially another 20 years!
Simon, Hove

The law should be changed as unsecured debt is expensive when compared to secured debt. Many people don't know about this, things must change.

I will writing to my MP and intend to start a campaign against this incorrect law !
Ian Watson, Cardiff

I've just heard the item about people having their homes taken due to bad dept repayments.

I must say that this is a good thing in many cases, as some people who know they cannot repay do take out large loans.

Some people who know they cannot repay do take out large loans David Webb, Lowestoft

Then they never bother to repay, as they know that the lender can't get the money back, or that the courts will say they only need to pay back 20p a year.

Others have to pay more on our small loans to get the lost people's money back.
David Webb, Lowestoft

I work for a CAB and am concerned by the increase in the numbers of charging orders creditors are applying for.

I have represented clients in County Court to oppose the charging orders but District Judges are not keen to find in favour of the debtor.

I wonder how long it will be before creditors start to press for a sale of the property to realise their debt?
Celia Evans, Goole

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